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Private Equity in Asia-Pacific
Nirgunan Tiruchelvam, Eurekahedge
August 2005

Private equity is a rapidly expanding industry in the Asia-Pacific region. It is estimated that there are over 500 private equity funds, managing over US$100 billion. They invest in sectors ranging from technology to healthcare. Some of the world's leading private equity funds are active in Asia. There are also some very large domestic private equity investors such as Government of Singapore Investment Corporation and JAFCO.

In 2003, there was nearly US$10 billion worth of private equity transactions in Asia, more than half of which was in Japan. This was a 20% increase on the previous year.

The region's policy-makers have recognised the role of private equity in the capital market. This is particularly the case in countries such South Korea and Japan, where private equity funds are helping reform the country's financial system.

Statistics

Asian private equity attracted US$6.5 billion in 2004, the highest amount since 2001, according to Centre for Asia Private Equity Research Ltd, which publishes the trade journal, Asia Private Equity Review.

This amount represents a 50% increase to the US$4.3 billion recorded in 2003. It demonstrates the health of the Asian private equity industry that is showing signs of recovery from troubles that followed the bursting of the tech bubble in 2000 and the SARs crisis in 2003.

In 2004, buyout funds accounted for 56% or US$3.7 billion of the US$6.5 billion of fresh capital. Expansion funds constituted US$1.9 billion or 28%. Technology opportunities represented US$1.1 billion or 16%. For the latter two kinds of funds, their respective 2004 records represent the highest increase in capital since 2002. The trend also highlights investors' regained confidence in Asia.

Asian Private Equity Funds Raised (2004)

Source: Centre for Asia Private Equity` Research Ltd

Asian Private Equity Funds Raised (2004)
Fund Category Amount (US$ billion)
Buyouts 3.7
Growth Equity 1.9
Technology 1.1
Source: Centre for Asia Private Equity Research Ltd

Mega Funds

Significantly, however, 2004 recorded the final closings and launch of mega funds, which have been absent from the Asian private equity scene since 2001. In November, Affinity Asia Pacific Fund II closed at US$700 million. It was the single largest buyout fund ever raised by an independent buyout management firm. HSBC Private Equity Fund II achieved a final closing at US$700 million, breaking the record as the single largest non-buyout fund. During the year CVC Asia Pacific, a leading buyout firm, also launched its second fund, at US$1 billion.

Private Equity Investments in 2004

Investments in Asian private equity registered in 2004 stood at US$11.6 billion, virtually the same as 2003. Japan continued to assume the position as the largest private equity market, taking up 76.6% or US$6.6 billion of the year's investments. Outside Japan, a new investment pattern has emerged, with China and India the most-favoured investment destinations. China attracted US$1.3 billion, almost the same as that in 2003. India saw a more than one-fold increase of private equity capital, at US$1.1 billion, coming into its market - an impressive jump compared to 2003's US$530 million.

Asian Private Equity Investment Amounts (2004)
Country Investment Amount (US$m)
Japan 6,560
China 1,344.80
India 1,069.90
South Korea 1026
USA 493.2
Hong Kong 332.1
Singapore 253.4
Australia 208.9
Philippines 104
Taiwan 38
Thailand 1.6
Malaysia 1.2
Others 160.6
TOTAL 11,432.50
Source: Centre for Asian Private Equity Research
 
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